Correlation Between Waterstone Financial and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial and Shinhan Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Waterstone Financial and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and Shinhan Financial Group, you can compare the effects of market volatilities on Waterstone Financial and Shinhan Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Waterstone Financial with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Shinhan Financial.
Diversification Opportunities for Waterstone Financial and Shinhan Financial
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waterstone and Shinhan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Waterstone Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Waterstone Financial are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Shinhan Financial go up and down completely randomly.
Pair Corralation between Waterstone Financial and Shinhan Financial
Given the investment horizon of 90 days Waterstone Financial is expected to generate 6.22 times less return on investment than Shinhan Financial. But when comparing it to its historical volatility, Waterstone Financial is 1.05 times less risky than Shinhan Financial. It trades about 0.01 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,555 in Shinhan Financial Group on August 27, 2024 and sell it today you would earn a total of 1,420 from holding Shinhan Financial Group or generate 55.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterstone Financial vs. Shinhan Financial Group
Performance |
| Timeline |
| Waterstone Financial |
| Shinhan Financial |
Waterstone Financial and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Shinhan Financial
The main advantage of trading using opposite Waterstone Financial and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial position performs unexpectedly, Shinhan Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shinhan Financial will offset losses from the drop in Shinhan Financial's long position.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| Shinhan Financial vs. Banco Santander Brasil | Shinhan Financial vs. CrossFirst Bankshares | Shinhan Financial vs. Banco Bradesco SA | Shinhan Financial vs. CF Bankshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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